I went to a sales leadership event in London a couple of months ago where UK sales leaders were awarded prizes for their performance. The central theme was how fast they’ve grown revenue for their companies, many of them 100% or more year on year. They were eulogised for their “super sonic and triple digit growth”.

I appreciate that sales leaders’ job is to increase revenue, but I believe this obsession over obscene growth — at all cost — is unhealthy and unsustainable for the companies, their employees and society at large.

In 2019, Wework and UBER epitomised this problem. According to Crunchbase, Wework has received $21bn in funding since it was founded, and in only nine years they have established themselves in 86 cities across 32 countries, and become the biggest office tenant in New York. Similarly, Uber has raised a total of $24.7bn, and has become one of the biggest ride sharing platform globally, operating in more than 785 cities.

The praise they have received for their growth turned dramatically into rage as they went public last year. UBER reported $5.24bn in net losses in one quarter alone, and Wework’s founder and former CEO, was fired from the company after its failed IPO. Despite the failure, he will reportedly receive £1.7bn, as Wework’s investors seek to buy his shares and take more control of the company.

Whilst the executives are secured financially for a couple of lavish lifetimes, Wework laid off thousands of employees and UBER drivers continue to receive below minimum wage.

Although available capital is critical for entrepreneurs, the growth obsession lead to extreme risk taking, squeezed margins, low salaries (for most staff), fast hiring and fast firing, and a plethora of unprofitable companies (which thus drain more resources from society than they give back).

Thomas Piketty’s best-selling book, Capital in the 21st Century, argues that unregulated capitalism will lead to greater inequality; that more capital will accumulate in fewer hands. Wework and UBER are arguably two extreme examples of how this can play out in reality. I hope that their failures and the following chaos spark discussions at future sales leadership conferences on how technology startups can achieve sustainable growth, positive impact to society and “super sonic” equality growth.

We’ve just finished week three at Antler, and have seven weeks left to team up with co-founders and develop a viable business idea. I’ve met many incredible people that I’m excited about working with — but am aware that time is limited to get to know them. To make the most of the remaining weeks, I’m using a concept I’ve written about before: failing fast.

While most people join Antler without a specific idea they want to pursue, I brought my own: enabling musicians to monetise their content.

Now I’m trying to determine whether I should pursue this startup, or explore others; how do I know which exciting project to throw myself into?

I’ve put together a simple approach to figure it out. Using elements of the framework I shared last week, I will validate my music idea in only 2–3 weeks:

• Traction: Can I get potential customers excited about the proposed solution?

• Team: Can I match with co-founders, who are also excited about the same idea?

• Joy: Does the project excite me? (Easiest element to identify.)

• Pain: Can I verify that I’m solving an actual problem with my proposed solution?

Getting out of my own head 🧞

It’s critical to speak with others and get out of my own head, as I’m not a genie who can think myself to the right answer 🧞 I will reach out to musicians and their fans (to verify traction and pain) and I’ll introduce my idea to potential co-founders (to verify team). The joy part I can figure out on my own 🙋

If these conversations reveal that monetising musicians’ content is a problem not worh solving, I’ll park it 👋 This way, I’ve failed fast and can explore other opportunities.

Opportunity cost is real, and following this framework I’m aiming to minimise it. Obviously, I cannot completely verify the quality of any idea in only 2–3 weeks, but this approach helps me structure my thoughts and prioritise my work.

À la prochaine 🖖

By Ingrid LiLL for Louis Grenier

Maybe the biggest mistake when starting our own companies is prematurely settling for a specific solution and audience — and that was epitomised during our two 24-hour sprints this week.

I came across the above drawing of Louis Grenier (a stellar marketer), showing a simple framework for how to choose a solution. In Louis’ own words:

…Not only does it make me look 20kg slimmer, but it highlights a core framework I like to share when picking the right audience to go after:

1) Joy: Do you like working with those customers? Or do they drain your energy?

2) Pain: Do they have a "bleeding neck" problem right now? Is it keeping them up at night? Or is a nice-to-have?

3) Access: Can you easily find people like them? Or is it a struggle to even know where to talk to them?

4) Money: Do they have money to pay? Can they say "Yes!" themselves or do they have to ask their boss?

Rank those attributes from 0 to 10 for each group of people you're thinking of going after.

It should help you to prioritize your efforts and find an underserved segment that can't wait for you to help them!

During our two sprints, we had to come up with an innovative and scalable solution for an industry challenge in insurance and property. As we only have twenty-four hours to understand the industry problem and develop a viable business solution, it was easy to jump on a sub-par solution in the interest of time.

We learnt this the hard way. We had a terribly awkward time pitching to the panel of industry experts, as we couldn’t justify whether there would be any demand for our solution 😳

It relates nicely to product market fit, and Andy Rechleff’s quote:

When a great team meets a lousy market, market wins. When a lousy team meets a great market, market wins. When a great team meets a great market, something special happens.

Even for a twenty-four hour sprint, it’s better to spend some extra hours finding a solution where there’s a great market.

And how can we know? Louis’ framework is a great starting point: joy, pain, access and money. From experience I would add one more criteria: is your solution feasible? Is it possible to build and implement it?

Sand in The Sahara ☀️

In the end it comes down to proper market research and preparation, and supply and demand. Do people actually want our product, or is our product like sand in The Sahara Desert? High in supply but short in demand 🤷 When you have developed and launched a product, it’s extremely hard to pivot into a new space. Sunk costs, motivation and lack of time will prevent you from doing that (although not impossible).

The same principle goes for choosing co-founders; it’s better to spend some extra time with potential partners in business before committing.

Until next time 🖖

Exciting news! In March, I paused this newsletter to pursue my own startup idea.

Since I was 16 years old, I’ve wanted to build my own company. I’m coming from a family of entrepreneurs: both my grandfathers ran their own companies (a fishing and a painting company), my parents built a printing press business and my brother is running a HR consultancy. Now I have the opportunity to follow a similar path, as I’ve joined the Antler programme.

Antler is an early-stage accelerator. With hubs in 16 countries across the world, they invite about 50 people to participate in each programme. The first ten weeks, we work together and team up as potential co-founders, find and validate a business idea and finally pitch for funding. When we (hopefully) secure funding from Antler, we work the following four months on launching a minimal viable product (MVP).

💡 To have or not to have an idea

Although some founders join without having a particular idea in mind to pursue, I have developed one over the past four months: enabling musicians to monetise their social content. Most successful musicians struggle to make ends meet: streaming pays very little, concerts are at best break-even and merchandise requires a lot of work. Creating a predictable revenue stream for musicians would positively impact so many musicians’ lives.

Which leads me to my motivations: launching my own startup means I get to work on something I care about. Moreso, having ownership in what I do is inspiring and meaningful — and if I make this company a success, I’ll have financial freedom (which would be nice 🙃).

👀 FOMO

As we’re all here to find co-founders, everyone joining Antler is open and friendly, trying to get to know as many as possible. The first week was great fun but instense for the introverts 😬 As we only have ten weeks to meet co-founders and launch the company, we’re making the most of every little minute and can, at some time, even feel FOMO if someone else is discussing an exciting business opportunity! No one wants to miss a beat.

Antler’s main value is their impressive network of investors and advisors; the first week was filled with lectures by successful entrepreneurs and investors who are driving the Norwegian startup scene.

🛠 The work begins

First week was filled with lectures and hanging out. Next week we start working together. We have two 24-hour sprints where we’ll collaborate in groups on coming up with an innovate business solution in insurance and real estate.

Stay tuned for updates on my entrepreneurial journey and whether I find my soulmate in business…

Hi there 👋 Norway’s wealthiest man, Kjell Inge Røkke, who built his wealth from the oil and gas industry, recently made significant investments in Bitcoin.

He’s written a white paper outlining why — and it’s an exceptionally well formulated explanation of the promises and perils of crypto currencies and blockchain (e.g. environmental concern). One argument that stayed with me is how bitcoin can be like an economic battery:

Bitcoin then acts like an economic battery. What otherwise was of little value locally, is turned into an economic asset that can be used globally. Extremely flexible demand from miners can optimise the local supply and demand for electricity, which may accelerate the energy transition by improving the economics for new renewable projects.

I read the same argument in another blog this week, where Bitcoin is compared to Iceland’s aluminium export:

Iceland has vast amounts of accessible, inexpensive renewable energy in the form of geothermal. But you can’t build power lines in every direction under the Atlantic. So instead of selling it directly, you convert the electricity into aluminum and you ship that around the world. In other words, you convert stranded renewable energy into value.

…

Which brings us back to crypto mining. Crypto mining converts electricity into value, in the form of crypto assets (BTC, ETH, etc). Those assets, like the aluminum produced in Iceland, can then be moved, transferred and transformed. But unlike aluminum, which must be physically shipped to its final destination, crypto assets are programmable, and can move there instantly via an internet connection.

I know this is a radical argument, but nevertheless worth exploring. In Norway, we have loads of renewable energy available, such as hydro and wind, which we can use to mine bitcoins. Once the bitcoin is mined, it can enable new applications worldwide, creating new economic opportunities.

It’s also noteworthy when business leaders from traditional industries, such as Kjell Inge Røkke, are putting their money on blockchain.

Jill gives to customers before taking.

Bill takes from customers before giving.

Jill knows that customers hate being sold to.

Bill pushes a sale before he’s even spoken with customers.

Jill always asks customers what they need, because she understands that customers know best what problems they need to solve.

Bill tells customers what they need.

Jill lets customers talk 80% of the time, listening and intimately understanding the their situation.

Bill talks 80% of the time, boring customers with useless overinformation.

Jill empowers customers with thorough information on how to solve their challenges.

Bill hides information from customers.

Jill defends customers internally, ensuring they remain a priority for product delivery. In return, customers trust Jill, ultimately championing and defending her as a supplier.

Bill forgets about his customers as soon as he’s closed the sale.

Jill plans for long-term collaboration with customers even at pilot stage. She understands the value of repeat business.

Bill looks for quick sales and short-term gains, misaligning himself with the customers’ ultimate needs. As a result, they don’t get what they need, and won’t buy from Bill again (let alone recommend him to others).

Jill enables customers for job promotions, as customers view any new investments as an investment in themselves. She understands that if her product meets customers’ expectations, it’ll position them for job promotions.

Bill’s short-termism and lack of care leads to poor product deliveries, making his customers look bad among colleagues.

Jill intimately understands the customers’ industry and satiates their hunger for information.

Bill doesn’t stay up to date on the customers’ industry, and as a result gives them poor advice on how to solve their needs.

Jill challenges customers’ assumptions like a good advisor, opening up their horizons to what’s possible.

Bills tells the customers what they want to hear.

Jill knows the virtual or physical arena where customers prefer to meet and when they are ready to speak. Jill’s customers trust her because of the excellent service she has provided, and they perceive any unexpeted calls or emails as friendly conversations.

Bill interrupts customers. They don’t trust Bill because of his poor service, and any interrpution is perceived as bothersome.

Jill builds genuine trust with her customers because she believes trust is the most important building block in any transaction.

Bad sales reps exploit customers’ trust.

Photo credit

I believe the US dollar, British pound, Euro and other traditional currencies aren’t fit for the way society evolves.

👉 If you want to transfer money from the UK to France, it’ll take you a couple of days and you have to pay significant transaction fees to intermediary banks and processors.

👉 If you want to trade on the stock exchange a late Friday afternoon, you have to wait two and a half days — it’s only open Monday to Friday between 9:30 am and 4:30 pm.

👉 If you want to have a say in how the dollar should be regulated, good luck voting in the next election. Decisions about the dollar’s future are a priveledge for only a small select elite, the Federal Reserve, with limited transparency.

The last 20-30 years, we’ve gone from sending post cards to sharing the majority of our lives on the Internet. We write blog posts instead of diary entries, we share photos on Insta instead of creating photo albums, etc. The way we interact with society is through connectedness — and when that connectedness to endless information is broken (i.e. Internet connection), we feel withdrawal symptoms and isolated from our community.

The slowness, opaqueness, undemocraticness of traditional currencies clash with our increasing requirements of always being connected, and from this tension we will see new innovations emerge that are a better fit. Today, some of those innovations are cryptocurrencies. Bitcoin or Ethereum aren’t necessarily the answer, but they have attributes which make them relevant to our desire of constant access to information.

Btw, I don’t necessarily believe that this connectedness is a good thing; it’s more an observation. Have a wonderful weekend, and don’t forget to turn it off 😏

(Today’s update is from the cabin ⛷)

Following my previous post on “Why triple digit revenue growth is wrong”, I’d like to share some thoughts on better ways to run and build companies 🏗️

At the end of the day, companies need to make money. We must celebrate entrepreneurs who are actually making money, not only those who increase revenue and market share.

Building new technologies takes time, and upfront capital is often necessary. But entrepreneurs should be incentivised to minimise external investments, and pursue a more frugal approach where control and profits should be priorities.

Venture capital firms often demand many times increase in revenue in a short period of time, but should rather demand a clear plan for how and when the company will break-even.

Starting new companies and creating new technologies involve a great amount of risk — but the risk should be equally distributed between founders, executives and employees. For example, thousands of Wework employees were laid off after its failed IPO, whilst the executives cashed out more than a billion dollars and moved on to their next gig. There will always be risks involved, but it should be more equally distributed — and I believe governments play an important role in that.

We invest in things that pay off fast in our personal and professional life, and we’re craving change, innovation and novelty (i.e. instant gratification). This arguably impacts investors who ask for faster growth. Instead, entrepreneurs should be given time to take the long term view. As the cliché goes: Rome wasn’t built in one day — but lasted centuries.

These are just some ideas of how companies can grow more sustainably, and there are definitely many more. More to come…

“How did you go bankrupt?” Bill asked.

“Two ways,” Mike said. “Gradually, then suddenly.”

This quote from is Ernest Hemingway’s book The Sun Always Rises. (Honestly, quoting Hemingway is only me trying to impress. I’ve never read any of his books!)

The quote is resonating with me, and is relevant to many aspects of life: relationships, finances, fitness and health, business or even the global climate.

Although negative events often feel sudden and dramatic, they are more often the result of a long-term trend. I’ve written before about Norwegian Airlines who made a huge bet back in 2012 when they purchased 222 new airplanes. They took up a large loan to cover the investments, and expanded fiercely into new markets. Then in 2018, they changed strategy from fast growth to becoming profitable. They had very little cash left in the bank, and had to start cutting costs.

In other words, it shouldn’t surprise anyone that Norwegian Airlines is walking a tight line these days, verging on the brink of total collapse and bankruptcy. In May 2016, its share price traded at $46.00; currently it’s trading at $0.07 😵

The same can be said about WeWork (see earlier article). In the wake of their failed IPO, more and more stories came out about a work culture with no cost control and lavish spending. WeWork’s sudden failure was the result of gradual decline. Another pertinent example is the ongoing pandemic; it felt sudden, but in reality was a consequence of ongoing poor animal welfare and hygiene in food markets.

But sometimes we have to take major risks. Perhaps it was the right decision for Norwegian Airlines to invest in 222 new airplanes in 2012. Maybe it was the only way they were going to compete successfully against Ryanair and EasyJet.

However, I’m wondering when Norwegian’s gradual decline started. Did some senior executives see already back in 2013 or 2014 that they were gradually going bankrupt? Could the course have been altered, and would that have changed the outcome we’re seeing today? 🤷‍♂️

It’s a healthy exercise to look back at the last month, quarter and year, and ask yourself if the current decline is part of a short-term trend, or whether it’s more systemic and has been going on for a longer period of time. You can often feel it in your gut, even though you don’t want to admit it. I think the best cure is an open work culture where criticism of senior leadership is welcomed.

Business aside – for everything that matters to us, we should have regular check-ins (maybe not as formal as quarterly reviews 🤪 ). How are our relationships doing now compared to a month ago? How is our health?

And remember: In the same way as gradual decline leads to bankruptcy, gradual increase will inevitably lead to success 🥳

How would you spend 8 hours a day if money wasn't an issue and you could be anywhere?

As my wife and I have been on a sabbatical for the last eight months, it’s a question we’ve asked ourselves many times — and it was brought up again in conversation this weekend with some friends.

It’s really hard to answer! Personally, I struggled to come up with good ideas, but ended up with different options:

maybe I would play keyboard in a band 🧑‍🎤

maybe I would move to a Pacific Island (but what would I do there?) 🏝️

or maybe I would just continue what I’m doing now, growing technology startups (but probably work fewer hours) 🤓

Asking myself the question has been a good exercise, as it challenges me and the choices I make everyday on how I spend my time.

Luckily, I like my new job at Iris.ai very well, and I wanted to share a little bit on how I’ve chosen to spend my time the first two weeks in the company.

👉 Do you know someone who’d enjoy reading my weekly newsletter? Share it! 👯‍♂️

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Fail fast 🚀

My job is to grow the customer base of Iris.ai. I’ve been given very free reigns to solve that challenge, which can be both a blessing and curse. One the one hand, I can use my experience and ideas to effectively make decisions and move fast, but on the other I can be distracted by the endless ways I could potentially approach the challenge.

My approach is to fail fast. I start by fixing my eyes on the prize — I define the goal I need to reach, which is growing customer numbers. Then I look at different ways I could do that. This is the stage where I can drown in a sea of ideas and be distracted. To avoid that, I list 4-5 tactics that could help me reach my goal, and build a plan for how to experiment with all of those quickly.

Let’s say one of my tactics is to reach new customers through social media. If I were to spend three months or more developing and executing the social media strategy, only to realise that it’s not effective at bringing in new customers, I’ve wasted lots of time. Instead, I’m setting aside two weeks or so to experiment with each tactic, and aiming to fail fast. If I can eliminate social media as a tactic in two weeks, I’ve succeeded. I can quickly move on to a second tactic.

When I have found the one or two tactics that are most effective, I don’t spend time understanding why the rest didn’t work, but instead on what I’ve just proven to work.

Time is the most limited resource we have, and by failing fast, we can quickly eliminate what isn’t productive.

Have a good weekend, all — and don’t forget to ask yourself the question 🏝️

Please share — I would love to hear from you!

But as people commented on the post, it's always easy to look back in hindsight. One person said:

You stating stocks that have performed well after the event is about as useful as you stating last week’s winning lottery numbers and saying if you had these you would have won millions.

Fair enough…

Nevertheless, it’s an interesting exercise to think through what the world will look like in 10 years and make choices thereafter. 

Who isn't always on the lookout for opportunities that the majority hasn’t discovered yet — that job in a company which will catapult your career, or that connection who opens a pivotal door? 🔑

Being able to read the market and understand what frustrates and excites the masses (or niches), will enable us to identify the next Microsoft and Amazon, and put us ahead of the rest.

Chamath Palihapitiya, a venture capitalist, shared his approach to reading the market by referring to bread crumbs. Let’s take Covid-19 as an example, and imagine that we’re considering investing in coffee. What traces, or bread crumbs, is Covid-19 leaving being itself in the coffee industry?

👉 People are sitting more at home and are arguably more bored. They’ll have time to drink more coffee.

👉 Coffee is addictive, so it will be one of the last products people will stop buying in financial difficulties.

👉 As many people will be unemployed, they will have less disposable income. They’ll arguably spend less on premium coffee (luxury) from coffeeshop, and more on cheap supermarket coffee they can brew at home.

👉 Most coffeeshops have been forced to close their stores, which have lowered their revenue.

…and you can keep following the bread crumbs that Covid-19 have left behind itself in the coffee industry.

Would I invest in coffee? Not Starbucks at least, because their coffees are expensive (and not tasty), and many of their shops have closed for long periods.

Purely from a profit point of view, maybe I would invest in the large coffee retailers selling in Walmart or other supermarkets. I can imagine lots of people the past months going nuts of boredom at home, and their little highlights everyday are those little, warm cups of coffee ☕ 🤗

It’s been a long month, but France finally got the green light yesterday to open up… #thatfeeling

As I read about the seemingly never-ending drama with Huawei, involving China, Canada, the US, Norway and many other countries, I was inspired to write about modern day colonisation. It’s easy to think of colonisation as a medieval legacy, but in fact, it’s still ongoing. Scroll down to learn how China uses increasing economic power to dominate 👇

Favourite links of the week 🖇️

LISTEN 🎧 Spotify has launched Harry Potter At Home, where Daniel Radcliff and other actors are reading Harry Potter and the Philosopher’s Stone from their homes. We can literally hear them flipping pages and cars passing through their neighbourhoods. It’s an intimate and truly magical experience 🧙‍♂️

WATCH 📺 Netflix just launched a new TV-series, History 101, bite-size history lessons on anything from fast food and the space race, to the rise of China. It’s highly recommended if you want to get a little bit smarter in a short amount of time.

Norwegian Airlines is now more Chinese than Norwegian

For more than 1,400 years, the Roman Empire colonised Europe with the sword. Its emperors sought increased power and influence using armed soldiers and brute force, and would kill anyone who refused to become part of their empire. Today, less blood is spilled and soldiers play a smaller role, but colonisation continues—through foreign direct investment.

What’s going on? 🤔

Last year, the US forbade all American companies to sell to Huawei, a Chinese provider of smartphones and mobile-network infrastructure. Similarly, Norway didn’t award a nationwide 5G-contract to Huawei. The Norwegian Police Security Service (PST) advised against doing so, as the company has close ties to the Chinese Government. The US, Norway and many other countries worry that China will spy on their citizens 🕵️ They are protecting themselves against invasive investments.

We’ve recently seen how China increased its influence through investments in foreign companies. When the Covid-19 lockdown happened, the indebted Norwegian Airlines saw their revenue plummet, which disabled them from paying their creditors. Their only solution was to convert debt into shares. In other words, companies who had lent Norwegian Airlines money converted the loans into ownership.

Guess what! One of the main creditors was Chinese, and Norwegian Airlines is now more Chinese than Norwegian 🤦

China has used its growing economy to become the world’s biggest creditor, having lent about $1.5 trillion dollars to more than 150 countries. Big parts of the global economy is fuelled by Chinese credit, but it’s not just charity—being the biggest lender, renders significant political power.

Are you enjoying reading this newsletter? You can tell as many friends as you’d like 📣

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How do invasive investments impact us? 💡

African countries account for 25% of member states in the UN. Most of them are also indebted to China. Their already poor economies are crippled even more, as they pay interest on loans. China can leverage this position politically. For example, there’s nothing stopping them from cancelling some of their debts in exchange for favourable votes in the UN. Worst case scenario, China could directly sway the vote of a quarter of the UN.

Large debts also mean considerable interest payments. Countries such as Sri Lanka and the Republic of Congo have debt exceeding 25% of their GDP. That means 25% of their economy leaves the country, instead of being used locally to improve schools and roads.

Profits leaving the country and tax payer money used to pay down foreign debt lead to a vicious cycle; indebted countries are crippled from improving the lives of their citizens, and the lenders solidify their domination.

What’s the better approach? 🤝

China isn’t bad or evil—as every other country, they want to protect their people and improve their economy. China suffered greatly during the 20th century from multiple wars and tyrannical governments. Now, they’ve done a tremendous job at lifting people out of poverty. Between 2000 and 2012, the share of people in the middle class grew from 4% to 68%. Still, we can’t allow them to influence our countries’ sovereignty through aggressive investments.

There’s no easy answer to this problem. Some suggest wiping out national debts, but what stops the same countries to spin back into old habits? Some suggest forbidding trade with Chinese companies, but this approach leads to hostility and tension.

My view on this topic is similar to that on the ongoing China-US trade war; instead of retracting behind our borders and forbidding trade with foreign companies, we should engage in discourse and diplomacy 🤝 In danger of sounding naïve, I believe there is mutual ground between China, Norway, Sri Lanka and the rest of the world, where China can invest in foreign businesses without interfering in other nations’ sovereignty. For example, trade agreements could ensure that foreign investors are obliged to reinvest some of the profits in the local community.

The world has become global 🌎✈️ China is the most important trading partner to the West, and there is no reason to believe that’s going to change. Trade deals have never been perfect, but they’re the best approach to reconciling countries’ interests and avoiding domination by the largest players.

The Roman emperors were effective at expanding their empire, and its citizens benefited greatly from its vast power and influence. Colonisation never ceased, and the past 40 years, Chinese citizens have seen their lives and wealth improve dramatically. Luckily, the sword has been replaced by foreign investments—but we have to be alert so China doesn’t become the new Rome.

Thanks for tuning in this week! To wrap it all up, I’ve added a little personal touch this week: here’s me holding a delicious pizza that my beautiful wife made 😋

Share the love? 🍕

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There’s nothing like going to the hairdresser after quarantine. This week I booked an appointment with Hairs (I think they got the translation wrong). She probably hasn’t cut Norwegian hair before, as she enthusiastically said: Oui, oui… Of course I know Norway. It’s next to Belgium. 😯 In my broken French, I managed to stutter that I normally don’t stay in France, but that I currently live on the street (I got my French mixed up, but we clarified it eventually) 😳

Anyways, my hair is sharpened, and so is my pen 🖋️ This week, I’ve delved into Bitcoin, as it reached a once-in-four-years milestone. I believe it’s more relevant than ever to all of us, and I untangle why.

👉 If you have a friend who’d enjoy this issue, feel free to share it 🕺💃

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Links to stuff I’ve enjoyed on the inter-webs 🖇️

Read 🗞️ Future of journalism

The media is making less and less money, and their reporting is more shallow. Substack.com, the platform on which I write, has written a post on the future of journalism. Substack is enabling journalists to reach more people, write conscientiously and make money. Great read!

Read 🗞️ Profile on Mark Zuckerberg

Ultimately, I think the reason that we built this successful thing is because we just solve problem after problem after problem, and typically you don’t do that by making impulsive, emotional decisions. –Zuckerberg

The New Yorker did an in-depth interview with Zuckerberg where we get insights into who he is, and his view on democracy, privacy and Facebook’s monopolistic powers.

Bitcoin 💊 an antidote to the ultimate drug, free cash

On 11 May 2020, it happened. A highly anticipated, once-in-four-years event. To some, as exciting as the World Cup in Football—to others completely uninteresting. I’m of course talking about…

💥 the Bitcoin halving 💥

Bitcoin probably hasn’t played a huge role in your life, yet. But it might be a good time to make your first investment, considering the way governments are managing their currencies.

The European Central Bank has been printing money out of thin air (i.e. quantitative easing) since 2014 to combat the debt in the EU. The Federal Reserves, the US Central Bank, has done the same since the Financial Crisis in 2008. And to keep the economy going during Covid-19, they’ve boosted the printer even more 🖨️ As the Federal Reserve Chairman, Jerome Powell, said in March 2020:

When it comes to this lending, we’re not going to run out of ammunition, that doesn’t happen.

Imagine you run a restaurant, and borrow $250,000 from the bank to get started. When it’s time to pay back what you’ve borrowed, you don’t actually have the money. So you go to your laptop and print enough $100 bills to pay the bank what you owe them. That’s the economy today 💸💸💸

It’s the ultimate drug 💊 It makes everyone feel good in the moment. The government pays me now, so I can pay the people I owe. I relax. But on Monday we get the blues. After the high, there’s a low. If you create more Dollars, Pounds and Euros, their value will go down. Probably not this year, nor the next. But at some point. That’s inflation.

This inspired a mysterious man/woman/group named Satoshi Nakamoto (to this date still an unidentified person), to launch an alternative means of payment, one that isn’t governed by central banks. In 2009, he/she/they released a whitepaper where a decentralised payment system was outlined, and Bitcoin was born 🐣

What is Bitcoin?

It’s a digital currency. It’s decentralised, meaning it’s not managed by a bank or other institution, but by its users. And it’s deflationary, meaning that supply is being reduced with time ⌛ That’s what happened 11 May 2020; the bitcoin supply halved. The same occurred four and eight years ago. Whenever new bitcoins were found in 2008, the finder was rewarded with 50 bitcoins. After the first halving, it was reduced to 25, and so on. Now, the miners are rewarded with 6.25 bitcoins. And most importantly, there are only 21,000,000 bitcoins in the world.

That’s a different game than that of the US Government who just created trillions of dollars.

Some also view Bitcoin as a store of value, similar to gold. It’s in limited supply and has persevered more than a decade since its launch, which makes investors confident that its value will remain high.

The most optimistic cryptocurrency fans even claim Bitcoin will become the new gold reserve. Fun fact: some of them have acquired an asteroid mining company, aiming to bring gold from outer space to Earth 👽 The increased gold supply will bring down the value of gold, making Bitcoin the new preferred store of value.

But of course…

Bitcoin, alone, is not salvation 👼 The price is volatile. In the past three months, it’s gone from £8,000 to £4,000 and back up again to £8,000. If you only owned Bitcoin, it would be hard to budget for your next holiday. Also, Bitcoin is pretty useless, as you can’t buy anything with it.

So why am I saying you should consider Bitcoin today? 🤔

I’ve ranted today about central banks and governments who print money from nothing and hand it out to people. I’m not saying they’re wrong. I’m merely pointing out that we’re in a crazy situation, and no one knows what the outcome will be for our economy, savings and currencies.

To be best financially equipped 🧰 the golden rule is diversification. In other words, it’s bad practice to have only one asset, for example cash. Instead, we should own a little bit of all assets. That includes Bitcoin, particularly as it’s deflationary. It should be a small part of everyone’s investment portfolio. (Invest only what you can afford to lose.)

Maybe we don’t like crypto currencies generally and Bitcoin specifically because it's so mysterious and weird. We don’t even know who created it! And most of us don’t really get how it works (including me). But who really understands how traditional currencies work? The Pound, Dollar and Euro are as intangible as Bitcoin. Only 8% of the world’s money is in printed cash, the rest exists only on your computer screen 🤳

Currencies should always serve us, not the other way around. By having a diversified portfolio, including Bitcoin, we ensure we always have means to pay our bills and put food on the table.

Crypto brings out a lot of emotion. If I’ve stepped on your toes or you disagree, please shoot me a message, and we’ll debate 💬

This week has been particularly exciting for me. Yesterday, I bought fresh coffee beans from a local coffeeshop for the first time since confinement. Needless to say, I jumped out of bed this morning to brew the fresh beans into a warm and heartful cup of happiness.

Earlier this week, I wrote a piece on income inequality which bent my brain in ways I didn’t expect. There’s an argument that income inequality isn’t bad for human well-being and progress, which I tried to untangle. It was hard, abstract and frustrating – but I managed to put my thoughts on paper in the end. If you feel a bit philosophical today, you can check it out here.

If you haven’t already subscribed, you can get this newsletter straight into your inbox every Friday by…

signing up 📥

Some links to Internet stuff I’ve really enjoyed 🖇️

🎧 The Daily’s podcast on The Spectacular Rise and Fall of WeWork. The office provider became infamous for its rapid growth, which led to a tragic implosion due to financial misconduct. I’ve been personally very frustrated with tech companies’ growth obsession, and WeWork epitomises this.

🔎 Do you know how wealthy Jeff Bezos, Amazon Founder and CEO, is compared to yourself? The answer is much richer than you might’ve thought. This visualisation shows his wealth to scale. Just keep scrolling…

If you have any feedback on this newsletter on what you liked or didn’t like, shoot me a message on dhummelsund@gmail.com

💰🚬👯 Cash, cigarettes or social company. What do we value the most?

Did you watch the TV-series, Breaking Bad? Towards the end, the main character, Walter White, has become a multi-millionaire from drug trafficking and the police is after him. He’s hiding all alone in a cold and remote cabin. He has no contact with the rest of the world except with a man named Ed, who drops off food once a month. What’s Walter’s money worth now?

I received some good feedback from one of you guys, asking for a post on where money goes in recessions. We’ve seen headlines the past few months of billions of dollars apparently being lost in a day and stock markets plunging. So what’s happening?

There are two points I want to make about where money or value goes: 1) In financial recessions, money actually disappears into thin air because investors believe it’s worth less 🤯 and 2) investors move their values from “unsafe” assets, such as stocks, to “safe” assets, such as cash or gold.

What on earth has belief to do with money? 🙏🏻

The reason why it’s quite hard to wrap our heads around money and value is because money isn’t real. Money is worth as much as we believe it should be worth. If your neighbour believes one day that your one dollar paper note isn’t worth anything, then it isn’t. And during recessions, our faith in the economic system is broken; we question its value.

For example, let’s say you buy one share in Apple for $10. Then, one year later, you sell that share, but the price has gone down to $5. Where has the remaining $5 gone? It’s disappeared into thin air. It no longer exists because we (the investors) don’t believe Apple is worth $10 anymore 🤷 That’s why we say that the stock market is a wealth creator and destroyer.

So let’s backtrack a little. Why do recessions happen? The Covid-19 recession happened because the virus forced Chinese factories to close, directly impacting companies around the world—like European car manufacturers, which were dependent on deliveries from those factories. In turn, the car manufacturers weren’t able to sell as many cars, so revenue went down. The owners of the car companies, the shareholders, were worried that the companies’ value would go down, so they started selling the shares of the company. Since more people were selling than buying shares, the value and price went down 📉

In a week, most companies around the world were valued 25-50% less because people didn’t believe they were worth as much any more. A very important underlying assumption for us to remember is that humans are irrational 🙈 We become afraid of losing money, and if we think the price of our shares might go down, we are prone to selling quick.

That leads me to the second point: investors move their values to safer assets.

Warren Buffett, the fourth wealthiest person in the world, just sold all his airline stocks, worth billions of dollars, because he believes that the airline industry will never recover from this recession. His company, Berkshire Hathaway, now has a cash pile of $137.3 billion dollars 💰 because he has more faith in cash than airline stocks.

Some even believe that cash is unsafe, and prefer gold 🏴‍☠️ That’s why gold price often goes up when stock market goes down, and vice versa.

In extreme situations, people believe cash is unsafe or worthless and stop using it. Do you remember in another TV series, Prison Break, how Michael Scofield and the other prisoners bet and traded cigarettes? Well, it happens in real life too. After World War II, cigarettes became the preferred currency in Berlin. The Berliners didn’t trust the official currency anymore, the Reichsmark, because it could only be used to buy a little bit of food. To get enough food, the Berliners travelled to the countryside in search of a farmer who would only sell them some in exchange for cigarettes 🥕↔️🚬

When our economy is disrupted by war, financial crises or pandemics, our faith in money and its value is questioned.

What’s valuable to us at the end of the day?

Walter White in the TV series, Breaking Bad is all alone, isolated and lonely in a cold cabin with lots and lots of money. But his money is worthless in an isolated life. When Ed comes for his monthly food supply drop-off, Walter asks him to stay a bit longer. When Ed says he can’t, Walter pays him $10,000 to stay one hour. Social company has become his new currency 👯👯👯